reposting.

This post has been edited by kingz113: Jul 5 2018, 09:04 PM

I think the transition to FI takes some practice and you really have to make an effort to ensure your passive income replaces your income on a monthly basis.

I've heard of some possible strategies like
1. Opening few FD that matures every month.
2. Living on rental income
3. Living on shares dividends.
4. 4% withdrawal rule
5. Living off a set amount of savings and let the above replenishes itself from the above.

Curious to know some real FI strategies that you guys implement.

Personally we are a young family, 31 and after some business opportunity that paid off, we have accumulated enough assets to be FI.

We have a few investment properties which the loan is paying itself off thru rental.

Something that I did consider was to paying off all our loans, but the yield on investment property staggers around 4%, which is pretty poor considering FD rates are higher.

Thus we have this net worth that's locked up in diversified investments, but they don't necessarily translate to monthly income. For me to be perfectly FI is to generate the highest return for my assets, yet liquid enough to provide me with at least a quarterly income.

However as a passive investor, I rarely cash in on my investments and it just sits in the account growing. Will be interested in some advice as to how people with large amounts of equities or UT turns it into a fixed stream of income.

As of now, I'm just continuing my biz to pay off monthly expenses. We have alot of disposable income every month (55-65%) even without cashing in on our investment returns. We are not frugal but not lavish spenders either. I'm just afraid of losing this flexibility if i close up my biz and purely depend on my investments.

I'm young but love to speak to seniors regarding retirement.

When they're retired, seniors almost everyday cook at home, not because they have no choice, but because the food at home taste better, way more nutritious and of course because they have all the time in the world. Not to mention their intake is so little with just plain food.

One couple who is retired for 10 years said 3k is way more than enough. This is a simple couple who do not do much travelling.

Another couple also gave a similar figure. When I asked is 5k a month sufficient, I was met with a light ridicule saying what are they gonna do with so much money a month. This is a couple who travels 8-10 times overseas a year, has potentially upwards of 10m in assets. They live a simple life but made good financial decisions hence the extremes in assets value and frugal mentality. Their travels are paid for by what the husband earns on a PT basis selling niche handmade hardware (USD). They are one of the happiest couple I know.

Based on the above, I can safely conclude that 3-4k a month is enough, with a sellable PT skillset, sufficient medical coverage and a comfortable nest egg. Provided your kids education, house and cars are paid for.

Yes theyre smack in the centre of PJ where everything is more expensive. I've observed that it is super imperative for me to be somewhere super convenient and strategic during retirement. First being the convenience. Second being ppl tend to visit u more. Thirdly u have a better community with more entertainment options (ppl are more willing to do things undeterred by distance for a wider range of activities).

From my close observations of retirees, there is a stark difference between those who have a PT gig, and those that isolate themselves at home doing gardening everyday. Those without a side gig tend to be more reclused (a natural consequence of isolation) and alot more intolerable by just being a pain to be with. The years of boredom will take a toll on someone's mental health.

Those that do a side gig (for supplementing income or otherwise) can be the gentlest nicest ppl to talk to. It's like they've reached this level of zen when they leave the busyness of this world.

Whilst financial freedom is the goal for retirement, having a purposeful endeavour sustains you thru that golden period, instead of money alone.

I for one look up to my old boss. He's 80, goes to his professional work at 830am and leaves work at 4pm mon-sat. He doesn't receive a salary, just paid for expenses. I hope I can still be the same as I age, to have purposeful vocation until the day I leave.

Started investing since 2008. Market was always up.

Now marketing is dipping and it looks to stay that way for the foreseeable term.

Good wake up call that financial freedom is not as easy as it seems. Had a terrible investing year so far.

My plan for record purposes. I've been on a journey of investing since 2007 when I was 20. I opened my first Super account and I had about 70k then invested in shares and also retirement account.

What I realised is that the longer I do this with increasing net worth, the harder it is to achieve a consistent return of even 8% across my investment due to the various investment products and the need to keep track of them. Not to mention the volatility in the market in the last few years really made me doubt if I can achieve the same consistent return of circa 10% before Trump became president.

At 32yo, my household networth is close to 3M. I have an additional 2 investment properties worth about circa RM900k returning at a consistent rate of 4% (equity of about 150k and the rest loan).

Our current total yearly expenses is about 120k/year and household take home is about 250-300k. Last few years was a lot more but this year I've started to take it easy. I however can reasonably expect this go up to about 500k as the wife is flying high in her career.

I personally do not plan to retire (work until at least 75-80) and at my currently work load, I can easily get 10k/month working 3-4 hours a day.

I have a very conservative expectation on my rate of return at only 5-8%/annum and our household can add an additional savings of at least about 100k a year.

At this rate, at 55yo I can expect a future value networth of about RM15-27M (assuming all invested) but with a present value of only RM7-12M based on inflation rate of 3.5%.

Based on the above at 55yo, my present value monthly active income should be RM10k (day-to-day profession), passive income should be a minimum of RM28k (4% FD rate) + rental income (if any). This excludes any inheritance we may/may not receive, but both our parents are very wealthy with networth more than 10M each.

Based on the above, I can reasonably conclude that we do not have to put any more effort into retirement planning and can pretty much go into cruise control. Of course the above do not take into account the vicissitudes of life. However I've been quite conservative in my income projections so hopefully this sets off any potential unfortunate events. We are also very well protected in terms of insurance coverage (about 2.5M life and TPD coverage each) + medical insurance.

At the current point in time, we are very contented with our modest terrace house and 2 non luxury cars. We only focus on doing my job well, spend moderately and enjoy the company of friends and family.

This post has been edited by kingz113: Aug 14 2019, 03:08 PM

Yes eventually. However will adopt the same methods my parents did. government school all the way. Kids education expenses are the only unknown variable in our equation but I have already thought out a strategy for that.

The wife and I were both from government schools and we turned out just fine (we're both very highly educated though), so not going to waste money on overpriced education.

With any luck, the kids will be on scholarship if they're academically brilliant. If they're not will just get them to do a trade or something they like. Interestingly most of my friends who are rich in life are from backgrounds who didn't go to uni, or doing something unrelated to their uni course.

By the time you retire, imo the house and car should be paid off. I wouldn't retire if I didn't have a fully paid house just to have that ultimate peace of mind. 10k without house and car repayment will be overkill. I enjoy speaking to retirees and was quite relieved when they told me 5k/month for a couple during retirement is mighty plenty!

My dad retired when he was 43 with a family of 5. He then took the family over to Australia and retired there.

As someone who witness his post retirement life, I will caution those who are retiring young without a proper post retirement plan.

First and foremost, retirement days are long and boring. After 1 year, I could see my dad was bored out of his mind. He started to micro manage his 3 teenagers life, and needless to say he was major PITA and our relationship soured.

Secondly, it was very financially dangerous as he started to dabble with online gambling via trading stocks and CFD. Initially it paid off but soon after he began to lost alot of money. He then invested in a franchise, but that failed as well.

Thirdly he lost his mental sharpness as a result of the above. he was very successful when he was young and had accumulated alot of assets. However he lost a lot of money when he disposed of a few aluable assets just prior to the 2008 boom.

It is however not all doom and gloom la. His 3 kids went on to get almost full scholarships so he only spent less than 100k for their education. Each kid has 2 degrees so pretty good value there. All the kids are also self sufficient and reasonably successful in career, never needing money from him even when buying their first homes.

He is naturally a hawk so the retirement life didn't suit him at all. At 55 he went back to work full time and now runs 3 businesses.

Yeap uni and scholarship in Australia.

3m current networth fully invested at a compounded annual rate of 5% with additional 100k annual savings for 25 years will get u 15m non inflation adjusted figure. After taking into account inflation of 4-5% this number becomes much much smaller.

Contrary to popular belief, your spending goes down significantly after you retire at the right age.

Your appetite for food, as well for luxury decreases considerably.

My in-laws told me 5k a month/couple as their pension is mighty plenty during retirement and they have no means of spending even close to that.

I guess they probably start realising the best things in life are free. Time with children. Having a hobby that generates them income. Friendships etc.

They are very loaded and very healthy anyway. The pension has them sorted financially that they don't even have to touch their passive income from shoplots, rentals, equities, income from hobby, money from children.